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Opinion Contributor

SEC rule on corporate political giving too extreme

The Securities and Exchange Commission is an independent agency charged with protecting investors; maintaining fair, orderly and efficient markets; and facilitating capital formation. Despite this clear mission, the SEC recently quietly disclosed that its staff is working on a rule-making that is antithetical to its goals and raises serious questions about the agency’s independence.

This potential new rule would mandate disclosure of corporate spending on political and other advocacy activities beyond existing disclosure requirements under federal and state laws. Such a rule would be yet another questionable regulation from Washington designed to serve the narrow political objectives of a few at the expense of general shareholder interests.

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Not only would this rule be bad policy, but huge majorities of shareholders routinely refuse to support mandatory disclosure of this legally protected corporate information. In fact, during the 2012 proxy season, among Fortune 200 companies, 82.21 percent of shareholder votes — up from 77.04 percent in 2011 — refused to support activist proposals seeking compulsory disclosure to shareholders of amounts spent on political or lobbying activities.

These overwhelming shareholder majorities understand that sometimes, as in this case, excessive and selective disclosure is not in their economic interest. Why then would the SEC consider imposing an intrusive mandate to the detriment of the very investors that the agency is supposed to protect?

Sadly, the answer is that a small number of political and social activist investors, unions and politicized policy groups such as Media Matters for America, the Center for Political Accountability, ThinkProgress, Public Citizen and the Coalition for Accountability in Political Spending have embarked on a widespread campaign to force companies to disclose their expenditures on political and issue advocacy. Their carefully sterilized public posture of simply seeking “more transparency” is belied by their comments to their own constituencies that illustrate their true intentions to ultimately inhibit the free flow of ideas and advocacy by those with opposing views.

These groups are transparently committed to use every means available to intimidate companies whose business decisions frustrate progress on the activists’ special-interest agenda, including initiating boycotts, personal attacks on managers, protests at employees’ homes and just-say-no campaigns against directors. A leaked memo authored by Media Matters embraces a strategy to “aggressively attack” and “create a multitude of public-relations challenges for corporations that make the decision to meddle in political campaigns.” To accomplish this, Media Matters pledged to work with other organizations “to provoke backlashes among companies’ shareholders, employees, and customers and the public at large.”